The 40 year-old definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) for retirement investors is outdated and needs to be amended now, according to testimony given today by representatives of the Financial Planning Coalition, which is comprised of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA).

Marilyn Mohrman-Gillis, CFP Board Managing Director of Public Policy and Communications, and Ray Ferrara, CFP®, Chairman and CEO of ProVise Management Group LLC, former chair of the Board of Directors of CFP Board and former FPA Board Director, stated in testimony at a hearing today held by the Employee Benefits Security Administration of the U.S. Department of Labor (DOL) that the Coalition strongly supports the DOL’s re-proposed rule – with important modifications to make it more workable across business models – and encouraged the agency to move forward with the rulemaking process.

In keeping with the Coalition’s efforts to advocate for policy measures that ensure financial planning services are delivered under a fiduciary standard, Mohrman-Gillis noted why the rule is urgently needed and beneficial for consumers.

“Retirement investors face a perfect storm in today’s financial services marketplace. With ever-increasing responsibility for their own retirements and the need to choose from an increasingly complex set of financial products and services, retirement investors more than ever need competent financial advice that is in their best interest,” Mohrman-Gillis said in prepared testimony. “Yet the current regulatory framework allows advisers’ interests to be misaligned with the interests of retirement investors resulting in the loss of billions of dollars in savings.”

The Coalition’s testimony also reflected its unique perspective drawn from CFP Board’s experience in establishing a fiduciary standard for CFP® professionals in 2007. Back then, firms and industry organizations made arguments similar to those being made regarding the DOL rule today, maintaining “that CFP Board’s fiduciary requirement was unworkable with their business models and that CFP® professionals would be forced to rescind their certification if required to operate under a fiduciary standard.”

Mohrman-Gillis remarked that, “contrary to those predictions, the number of CFP® professionals has grown by more than 30 percent to over 72,000 since CFP Board established a fiduciary standard. And many firms, to their credit, are recognizing the value of competent and ethical advice and are supporting CFP® certification for their advisers.”

Ferrara’s testimony underscored the workability of the rule, drawing on his more than 30 years of experience providing fiduciary-level advice across business models as a CFP® professional and small business owner of an independent financial services firm.

“Many in the industry say the re-proposed rule is unworkable, too costly and will force advisers to abandon middle-class clients. Based on our firm’s actual experience, we don’t share these views,” Ferrara said. He added that “the argument that this rule will diminish the availability of services to middle-class Americans is simply not credible. ProVise has successfully served middle-class clients under a fiduciary standard for years. The re-proposed rule still allows us, and everyone else to, provide advice using a commission or fee model. For anyone claiming that they are unable to serve middle-class clients under the re-proposed rule, ProVise and scores of CFP® professionals and FPA and NAPFA members across the country would be happy to help fill the gap.”

The Coalition outlined its full support in a 35-page comment letter submitted to the DOL on July 21, 2015.